Yesterday the December corn reversed higher following the lower than expected production estimate in the August supply and demand report. After an outside day higher on the chart, one expects to see follow through buying, but so far the market has not pushed through yesterday’s high. Yesterday’s high was right at trend line resistance making that level critical overhead resistance today. Hopefully short covering can move the market back to the $4.90 area, giving farmers another opportunity to sell.

Yesterday’s action in the wheat was a little disappointing. The ending stocks figure of 551 million confirmed that supplies are tight and getting tighter due to export demand. Traders, however, were more interested in buying corn and soybeans so the wheat was used as the short leg of spreads, which held the market back. The wheat is still stuck in a holding pattern and as much as I want to be bullish wheat, there isn’t any reason to do so until the September contract clears the 50-day moving average, which lies at the $7.10 area today.

Soybeans were strong yesterday and overnight thanks to the lower than expected production figure and ending stocks being cut to 220 million. It doesn’t hurt that the Chinese are actively buying new crop beans and making traders wonder how tight stocks might get next summer. The next upside target for the November contract is the $12.44 area.

Live cattle futures closed moderately to sharply higher on Monday and are seeing strong follow through buying in overnight trade. Rumors are circulating that at least one more packer may by eliminating Zilmax fed cattle from their kill in the near future. If true, we could see a solid extension of the current rally. We recommend tightening up stops on current long positions. Cutouts were sharply higher on Monday, continuing the firmer trend. Strength in the Dollar over the past couple of days could limit upside potential.

Feeder cattle futures closed moderately lower on Monday, with pressure stemming from a reversal higher in the corn market. Overnight prices are following the fats higher, in spite of further gains in the corn. The cash index was sharply higher on Monday and has closed the gap with the August futures to nearly 2.00 coming into today’s trade. We continue to see feeders as a grinding but choppy bull market.